Shares of Sun Pharmaceutical Industries Ltd declined as much as 4.5% in Tuesday’s session after Goldman Sachs downgraded the stock to ‘sell’ while cutting the target price to Rs 355 from Rs 437 earlier.
The stock touched a low of Rs 384 before recovering to trade at Rs 392, down 2.5%, at 2:30pm on BSE.
Goldman Sachs attributed the downgrade to Sun Pharma’s spending in speciality pharma which will impact the company’s profit growth in future.
Goldman Sachs added that the profit drivers for the company, including India, Taro Pharmaceutical and US generics, are also witnessing softer business momentum. In the March quarter, Sun Pharma had reported a 52.63% drop in consolidated profit at Rs 635.88 crore compared with Rs 1,342 crore in the same quarter last year.
For the full fiscal year ended March, the net profit of the company stood at Rs 2,665.42 crore. It was Rs 2,095.70 crore for the previous fiscal year. In a report dated 28 May, brokerage firm Sharekhan recommended to ‘hold’ the Sun Pharma stock with a target price of Rs 460. Sharekhan said that it expected Sun Pharma to report sales and profit CAGR (compounded annual growth rate) of 20% and 38% over FY2019-FY2021.
Meanwhile, HDFC Securities is bullish on Sun Pharma has recommended a ‘buy’ rating on the stock with a target price of Rs 600 in its research report dated 29 May. Hopes are hinged on a ramp up in specialty business, said HDFC securities. The Sun Pharma stock is down 6.6% this year, as of the last close, while the broader Nifty 50 index is up 9.8% in the same period.
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